International trade presents great opportunities and some challenges.
The standards development community is key to meeting these opportunities
and challenges. Just as business and workers are adapting to globalization
so must standards developers. As global demands grow and trade
barriers disappear, the quality of U.S. standards must continue
to meet the needs of the global marketplace.

The Demands of Globalization

Every hour of the day, more than $200 million of merchandise trade
flows through U.S. airports and harbors. Almost 25 percent of
our nations business is international and that percentage is
growing. Some businesses and workers count on trade for more than
50 percent of their sales and wages. The U.S. competitive success
in global markets reflects hard work, a solid currency, reliable
laws, and, importantly, the success of the U.S. voluntary standards
development community. Every dollar of that prodigious sum of
hourly international trade reflects engineering decisions embodied
in a standard that guarantees the free flow of goods by informing
and safeguarding consumers worldwide.

Lessons in StandardizationIt Can Happen to Anyone

The recent experience of a small Indiana company of 800 employees
that makes steel drum closures provides a lesson in globalization
and standards. This company was not a significant exporter and
was not directly involved in international business. Instead,
the company designed and sold their product in North America to
multinational chemical companies and by that route their product
circulated worldwide. The company contributed to the development
of voluntary North American standards but took no international
standards positions. Nevertheless, their product specifications
met the international needs of their clients as chemicals were
shipped in steel drums around the world and were compliant with
government requirements for safe transportation of materials.
If their specifications did not meet the requirements of a major
market, it would be a major problem.

In 1996, this Indiana companys only competitor, a European Union
company, introduced a draft European Commission for Standardization
(CEN) standard to be used for shipping requirements in the EU
that included design specifications. These specs supported their
own proprietary designs, but were incompatible with closure designs
from the United States. Given the global nature of the market,
if this standard prevailed in the EU, chemical companies would
have to choose the standard required in the EU, putting the U.S.
company out of business.

After two years of CEN committee work, this Indiana company prevailed
in introducing their designs in the CEN standard and establishing
recognition in the EU for their product line. Their competitiveness
was restored. But that is not the end of the story. Having learned
the effect of globalization, this Indiana company purchased EU
drum and closure companies, including users of their EU competitors
specifications. Today they still produce in Indiana but also in
Italy, the United Kingdom, and Belgium. Their product catalog
now includes EU-designed closures as well as their original North
American product line.

This is a great story from which come three lessons. First, European
standards developers took steps to correct a recognized problem.
Next, the standards development process was the catalyst that
enabled the U.S. company to be more globally competitive. Moreover,
this story shows how the U.S. company dealt with competing standards
that are broadly accepted internationally and through their efforts
ensured that consumers still have product choice.

This is also a good way to introduce what support international
trade needs from standards developers.

What Are the Expectations of U.S. Trade Policy?

In international trade, U.S. government expectations of the standards
development community are forthright and simple. We expect that
U.S. standards will inform the consumer worldwide and instill
confidence in a product developed to that standard. In May 1982,
former ASTM President Bill Cavanaugh summarized the right approach
before the 51st general meeting of the National Board of Boiler
and Pressure Vessel Inspectors. ASTMs method of procedure can
be described really in four words ... due process, complete openness.
And they remain the key elements that provide for relevance to
international trade.

There is no better way to expand trade and promote U.S. products
than by ensuring that consumers have the technical information
they need for a purchase. Many foreign consumers find it satisfactory
to rely entirely on a North American approach to safety, cost,
and engineering tradition, but increasingly U.S. standards developers
are expanding their technical positions to take account of global
customer needs. Global markets and the changing character of the
North American market mean that standards must change to reflect
this trend and maintain competitiveness. To Cavanaughs approach
I would add an explicit effort on the part of standards developers
to address international needs, such as the appropriateness of
foreign material specifications, engineering safety margins, and
the effect on costs of maintenance and manufacture.

How Does the WTO Come into This?

The role of standards development in international trade has become
so important since the 1990s that the World Trade Organization
established some fundamental principles to ensure that all WTO
members support the expansion of trade through standards development.
Because of the WTO Agreement on Technical Barriers to Trade, more
than 160 countries agreed that governments shall apply standards
on a non-discriminatory basis for all.

Moreover, all WTO members must maintain standards in such a way
that they do not create unnecessary obstacles to international
trade. This rule is intended as a discipline on government and
its mandatory requirements. It means that foreign governments
should not create an unnecessary obstacle to international trade
in their use of mandatory specifications or by direct or indirect
reference to voluntary standards. Governments of countries that
are members of the WTO are aware that they should not be adopting
or relying on technical positions that create unnecessary obstacles
to trade.

This is a very important rule that standards developers and users
of standards need to keep in mind. The force of this rule has
already turned out to be very important. A standard is unnecessarily
restrictive when it affects trade adversely more than is necessary
to fulfill a legitimate objective, taking account of the risks
from non-fulfillment. When any alternative standard is reasonably
available, fulfills a need, and is less trade-restrictive, the
government must give it consideration. Also, this leads to the
general preference for technology-neutral performance-based standards
rather than design-based standards to the greatest extent possible.

Of course, globalization and the increasing role of international
trade mean more demand for standards that meet the needs of the
stakeholders in most WTO member countries. In fact the WTO encourages,
but does not obligate, increased development and use of international
standards to expand trade particularly where governments intend
to use technical specifications as a condition of market access.
Governments have wide latitude in deciding the appropriateness
of an international standard to meet their needs under the WTO.
Ultimately, serious discussions on this subject come back to the
need for standards that are reasonably available, widely recognized,
relied upon globally, and that reflect broad market acceptance
by virtue of a development process that includes balance of interests,
openness, transparency, and consensus. The U.S. view is that this
is where the WTO can make the most effective contribution to facilitating
trade. This could reflect work achieved by the International Organization
for Standardization (ISO), ASTM, or the Japanese Industrial Standards
Committee (JISC). We are endeavoring to convince our trading partners
that this is the best course.

A Plea

In closing, let me make a modest plea for continued national unity
in the space where standards development and international trade
meet. Everyone in the standards community knows the advantage
of developing and sustaining a national technical position when
negotiating an international standards position. I suggest that
we maintain that same discipline in our public and private sector
relations. The U.S. government will not enter into obligations
with foreign countries affecting the interests of standards bodies
and standards developers. By the same token, where possible, standards
developers should avoid entering into international obligations
substantially different from that established by your federal
trade and technical agencies. The cooperation we have established
to develop the best technical standards in the world and to ensure
that these advance our global competitiveness will grow stronger
in the coming months as we look to the challenges and opportunities
of globalization. //

Copyright 2000, ASTM

Charles M. Ludolph is deputy assistant secretary, Market Access
and Compliance, with the U.S. Department of Commerce. Ludolph
is an economist with the department for 30 years and currently
directs all commercial activities with Europe.